In May 2010, aiCIO wrote an article titled "Wealth in Sin" focusing on the Vice Fund portfolio,
a mutual fund targeting about 30 "sin stocks"—a stark contrast with socially responsible
investing (SRI). Catholic Healthcare Investment Management Company (CHIMCO) would not
be one to recommend investing in that fund. As a wholly owned subsidiary of Ascension
Health Alliance, the largest Catholic and largest nonprofit health system in the country, its
goal for Ascension is to build asset allocation for the long haul so that it can provide better
healthcare to all, with special attention to those who are poor and vulnerable, and to invest
with values.

"We invest with specific values," says CHIMCO CIO David Erickson. Erickson was snagged
by Ascension from the $2.2 billion University of Wisconsin Foundation in 2009 to become its
very first CIO. In the nearly three years since Erickson assumed his role, St. Louis-based
CHIMCO has expanded its staff —now totaling about 25—to manage investments internally.

"Everything we invest in is done with our values in mind, and the clients we partner with have
similar values to ours." The next obvious question: How has that approach—one that takes
into account more than just pure return—impacted Ascension's performance? Critics of such
an approach are numerous, especially in the US where many investors value returns above
all else, criticizing environmental, social, and corporate governance (ESG)-guided investors,
for example, for intentionally limiting the breadth of their investing options. Yet, Erickson
responds to such critics by saying this philosophy has not hurt Ascension's performance;
however, it has required an extra amount of work. "It requires more due diligence and
monitoring," Erickson asserts. The asset size ($23 billion in assets under management) also
helps. "We work every day in developing relationships," Erickson says. "Obviously, our size
helps us to access excellent managers and negotiate from a position of strength."

Ascension is also perhaps the most intricate entity featured in this issue. Ascension formed
CHIMCO as a subsidiary in 2011. CHIMCO is a federally registered investment advisor, and
manages assets on behalf of a variety of institutional types. Those types include a nonprofit
healthcare system, foundations, defined benefit and defined contribution pension schemes,
and an offshore insurance trust.

One of the most successful initiatives for CHIMCO has been the way its investment staff has
overhauled its parent company's asset allocation. "When I first joined," Erickson explains, "we
had an asset allocation that was stocks, bonds, and alternatives. But we've changed that to
one based on economic regimes: growth, inflation, and deflation." It involved a renovation of
Ascension's investment philosophy, Erickson says, thinking in terms of economic regimes,
with assets fitting into those categories. "We feel we understand diversification better with the
new approach," he says. "We're able to be more tactical, having a better understanding how
our investments are correlated to the economic regime." That new framework has ended up
expanding the opportunities available to hedge funds, which are used in both the growth and
deflation allocations. —PV